LONDON (ShareCast) - (Sharecast News) - S&U said on Wednesday that first-quarter trading was ahead of both last year and budget, as the specialist motor and property finance group reported improving margins, stronger credit quality and continued recovery at Advantage Finance.

The London-listed company said group profitability for the period from 6 February to 30 April was ahead of the same period last year and above budget.

Applications for finance at both Advantage, its motor finance business, and Aspen, its property bridging finance business, remained strong, despite slower transaction growth during the period.

At Advantage, transactions in the quarter were up 63% on the first quarter of last year, supporting the company's aim to slightly increase its current 10% share of the UK used-car finance market and achieve targeted net receivables growth of 20% this year.

Capital receivables at Advantage stood at £392m, up from £348m a year earlier, across 57,666 accounts.

S&U said average lending rates at Advantage had risen by almost a fifth year-on-year to 15.3%, helping improve net interest margins.

Credit quality also improved, with Advantage repayment rates averaging 92.4%, compared with 89.1% a year earlier.

Collections received during the quarter totalled £43.1m, while bad debt write-offs fell by nearly 41%.

Customer repayments were 8% higher than last year, and Trustpilot scores remained at 4.9 out of 5.

S&U said the progress had been supported by a new credit scorecard, allowing more detailed lending criteria, and by artificial intelligence tools in customer relations, which it said were improving productivity while maintaining compliance with Consumer Duty.

At Aspen Bridging, first-quarter profit before tax was on budget and in line with last year, despite a subdued UK residential market.

S&U said recent weeks had seen a clear upturn in applications and deal numbers.

Aspen's capital receivables increased to £191m from £162m a year earlier, with a slightly longer-term profile and higher blended margins.

The company said the quality of the loan book remained high, with only 15 of 246 live accounts beyond term. Bridge-to-let collections and fees reached £1m in the first quarter.

Group borrowing stood at £252m at the end of the quarter, within current facilities of £330m.

S&U said projected net receivables growth of 20% a year over the next three years could require an additional £300m of funding over that period.

The company said its securitisation project was nearing completion, with terms agreed and the legal process about to begin with selected financial partners.

It said the facility would provide medium-term funding at lower rates and with similar flexibility.

Chairman Anthony Coombs said confidence in S&U's aims for double-digit growth and return on equity was reflected in the resources the group planned to make available and the capabilities of its staff.

"At this stage in the year, it is usually unwise to attempt year end predictions, particularly in such a fluid political and economic climate," he said.

"Suffice to say that confidence in our aims for double digits growth and return on equity is exemplified by the resources we plan to make available, and the abilities of our people in achieving them."

At 0959 BST, shares in S&U were up 7.98% at 2,008.5p.

Reporting by Josh White for Sharecast.com.

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